Analysis based on September 23, 2022 data
The DJIA closed at 29,590. So, where is the Dow headed? Here, we arrive at a prediction for the DJIA based on what the Wall Street analyst community forecasts for each of the 30 stocks in the DJIA.
Where is the Dow headed: Methodology
We take the analysts’ 1-year target price estimate for each of the 30 stocks in the Dow Jones Industrial Average (DJIA) from Refinitiv.
Next, we calculate the value of the DJIA if all of its 30 constituents trade at their 1-year target price estimate.
Where is the Dow headed: Answer
The DJIA would be at 37,032 if all of its 30 constituents trade at their 1-year target price estimate.
This implies a 25% gain from its current level.
Looking at individual stocks within the DJIA, Boeing (BA) shows the highest appreciation potential. Its target price estimate is 59% above the market price.
Amgen (AMGN) shows the lowest appreciation potential. Its price estimate is 12% below the market price.
Where is the Dow headed: Looking back in time
The DJIA fell by 4.0% last week. The analysts’ 1-year target price estimate fell by 0.1%.
Last week, analysts raised their target price for Chevron (CVX) and Merck (MRK) by 0.3% and 0.2% respectively, and lowered their target price for Intel (INTC) and Dow (DOW) by 2% each.
The following chart shows how the actual value of the DJIA and the computed value based on analysts’ 1-year target price estimate have varied over time.
Where is the Dow headed: What to Make of the Answer
Like any precise market forecast, this one will likely be proven wrong. One year from now, the DJIA will likely be anything but 37,032. This estimate is, however, not useless.
It provides a sense of what the Wall Street analyst community thinks of different large companies and what these prospects collectively mean for the U. S. stock market as measured by the DJIA.
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